Gold initially dipped after the release of the US Consumer Price Index (CPI) report, which showed annual inflation at 2.4% in September, slightly below August’s 2.5% but above market expectations of 2.3%. Core CPI, which excludes food and energy, rose by 3.3%—higher than both August’s 3.2% and forecasts, signaling persistent inflationary pressures.
However, gold quickly rebounded after labor market data revealed a softer-than-expected performance. Initial jobless claims for the week ending October 8 surged to 258,000, well above the 225,000 reported the previous week and higher than the forecast of 230,000. Continuing jobless claims for the week ending September 27 also rose to 1.861 million, signaling potential weakness in the labor market.
The labor market softness bolstered the likelihood that the Federal Reserve will maintain its dovish stance and proceed with an anticipated interest rate cut at its November meeting to support the economy. Lower rates typically benefit gold by reducing the cost of holding the asset compared to interest-bearing investments.
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